Using a Spreadsheet to Calculate Pension Benefit Payments: Your employer uses a career average formula to determine retirement payments to its employees. You have 20 years of service at the company and are considering retirement sometime in the next 10 years. Your average salary over the 20 years has been $50,000 and you expect this to increase at a rate of 1 percent per year. Your employer uses a career average formula by which you receive an annual benefit payment of 5 percent of your career average salary times the number of years of service. Calculate the annual benefit if you retire now, in 2 years, 5 years, 8 years, and 10 years.
Retire | Average Salary => | The Payment Will Be |
Now |
$50,000 |
50,000 × 0.05 × 20 = $50,000 |
In 2 years |
51,005 |
51,005 × 0.05 × 22 = $56,105 |
In 5 years |
52,551 |
52,551 × 0.05 × 25 = $65,688 |
In 8 years |
54,143 |
54,143 × 0.05 × 28 = $78,800 |
In 10 years |
55,231 |
55,231 × 0.05 × 30 = $82,847 |
Using a Spreadsheet to Calculate Pension Benefit Payments: Your employer uses a career average formula to...
Problem 3: Using a Spreadsheet to Calculate Pension Benefit Payments Your employer uses a final pay formula to determine retirement payments to its employees. You have 20 years of service at the company and are considering retirement sometime in the next 10 years. Your employer uses a final pay formula by which you receive an annual benefit payment of 4 percent of your employer uses a final pay formula by which you receive an annual benefit payment of 4 percent...
HELP! You have just been hired by your new employer and must choose between two retirement plan options... You have just been hired by your new employer and must choose between two retirement plan options: (1) the state’s defined benefit plan and (2) a defined contribution plan under which the employer will contribute each year an amount equal to 8 % of your salary. The defined benefit plan will provide annual retirement benefits determined by the following formula: 1.5% x...
Your employer has agreed to make 80 quarterly payments of $400 each into a trust account to fund your early retirement. The first payment will be made 3 months from now. At the end of 20 years (80 payments), you will be paid 10 equal annual payments, with the first payment to be made at the beginning of year 21 (or the end of Year 20). The funds will be invested at a nominal rate of 8 percent, quarterly compounding,...
Clark Industries has a defined benefit pension plan that specifies annual retirement benefits equal to: 1.7% x Service years Final year's salary Stanley Mills was hired by Clark at the beginning of 1999. Mills is expected to retire at the end of 2043 after 45 years of service. His retirement is expected to span 15 years. At the end of 2018, 20 years after being hired, his salary is $85,000. The company's actuary projects Mills's salary to be $320,000 at...
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Sachs Brands' defined benefit pension plan specifies annual retirement benefits equal to: 1.3% x service years x final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 2004 and is expected to retire at the end of 2038 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $81,000 at the end of 2018 and the company's actuary projects her salary to be $235,000...
Sachs Brands' defined benefit pension plan specifies annual retirement benefits equal to: 1.4% × service years × final year's salary, payable at the end of each year. Angela Davenport was hired by Sachs at the beginning of 1999 and is expected to retire at the end of 2033 after 35 years' service. Her retirement is expected to span 18 years. Davenport's salary is $82,000 at the end of 2013 and the company’s actuary projects her salary to be $240,000 at...
Clark Industries has a defined benefit pension plan that specifies annual retirement benefits equal to: 1.7% x Service years Final year's salary Stanley Mills was hired by Clark at the beginning of 1999. Mills is expected to retire at the end of 2043 after 45 years of service. His retirement is expected to span 15 years. At the end of 2018, 20 years after being hired, his salary is $85,000. The company's actuary projects Mills's salary to be $320,000 at...
Precision Company has a defined benefit pension plan for its employees. Payments are made annually to the pension plan equal to 3% of the employee's highest lifetime salary multiplied by the number of years the employee has been with the company. Marci Clark's salary in 2019 was $75,000. Ms. Clark is expected to retire in 20 years. Her salary is expected to increase at an average rate of 4% each year before she retires. As of the January 1, 2019,...
Sachs Brands' defined benefit pension plan specifies annual
retirement benefits equal to: 1.6% × service years × final year's
salary, payable at the end of each year. Angela Davenport was hired
by Sachs at the beginning of 2004 and is expected to retire at the
end of 2038 after 35 years' service. Her retirement is expected to
span 18 years. Davenport's salary is $94,000 at the end of 2018 and
the company's actuary projects her salary to be $300,000 at...
Sachs Brands's defined benefit pension plan specifies annual
retirement benefits equal to 1.5% × service years × final year's
salary, payable at the end of each year. Angela Davenport was hired
by Sachs at the beginning of 2007 and is expected to retire at the
end of 2041 after 35 years' service. Her retirement is expected to
span 18 years. Davenport's salary is $88,000 at the end of 2021 and
the company's actuary projects her salary to be $270,000 at...